Top-Heavy Market Thus Far in 2017

Mar 20, 2017

March 20, 2017

The S&P 500 is up over 6% already in 2017, but thus far it has only been large-cap stocks posting meaningful gains. We broke the Russell 3,000 into deciles (10 groups of 300 stocks each) based on market caps in order to highlight this trend. In the chart below, decile 1 (labeled “Largest”) contains the largest 10% of stocks in the index at the start of the year. Decile 2 contains the next largest 10%, and so on and so forth until you get to the last decile (labeled “Smallest”), which contains the smallest 10% of stocks in the index. For each decile, we’ve calculated the average stock’s year-to-date percentage change. The two deciles containing the largest stocks in the Russell 3,000 have averaged gains of more than 5.7%. The next four deciles have all averaged YTD gains as well, but the four deciles containing the smallest stocks in the index are all averaging declines in 2017. The average YTD change of the stocks in the smallest decile is -1.96%, which represents significant underperformance compared to the cap-weighted S&P 500’s year-to-date gain.